Intel Has Huge Tablet Market Opportunities with Atom “Silvermont”, But Core i “Haswell” More Important – Financial Analysts

Intel Corp. has huge opportunities with its next-generation Atom system-on-chips with Silvermont micro-architecture. The company will command 75% of Microsoft Corp.’s Windows-based media tablets and 7.5% of Google Android-based slates. Even though new Atoms will ship in quantities of tens of millions of units, Intel’s traditional lines based on Haswell will be more important for the chip giant.

“Intel has made great strides optimizing its Atom architecture for the performance per watt needed for ultra mobile devices. While it is hard to say for sure until we see product benchmarks in customer devices, it certainly appears that the Silvermont architecture announced this week puts the company in position to compete aggressively on specifications,” wrote Joseph Moore, an analyst with Morgan Stanley, in a note to clients, reports Tech Trader Daily.

The analyst predicts that the success of Intel Atom “Silvermont” system-on-chips for tablets will be closely tied to success of Windows 8 operating system on the market. While there will be slates based on Intel Bay Trail-T platform and Google Android operating system, they will not be as popular as x86/Windows products. Keeping in mind that the majority of applications for Google Android run perfectly on low-cost SoCs based on dual-core ARM Cortex-A15, Intel simply cannot offer enough advantages on that market until there are programs designed specifically for x86 or Silvermont.

The market observer models that Intel will ship 36.1 million and 50.2 million Aton SoCs in 2014 and 2015, respectively. Each Atom system-on-chip is projected to cost around $20, considerably lower compared to average selling prices (ASPs) of Intel’s traditional Core i or Pentium products. As a result, financially, Intel will continue to depend heavily on microprocessors for personal computers. Therefore, market success of new PC form-factors is crucial for the future of the world’s largest maker of chips.

“While we are encouraged by Intel’s progress in ultra mobile, the key debate for the stock remains higher-end Haswell architectures, and the next generation ultrabooks that they will enable. If Intel is able to use very innovative form-factors to mitigate tablet cannibalization altogether, without sacrificing its own ASP, it will allow them to maintain traditional profits, which are unmatched by any other semiconductor end market. We continue to view higher end ultrabooks as somewhat challenging; by adding touch panels, SSDs, and thin form-factors, providing high-end detachable and convertible form factors, Intel is adding $200+ to the bill of materials. So, if ultrabooks are going to return the industry to growth, there is implicitly the assumption that PC ASPs will rise, which historically speaking has been a difficult proposition,” said Mr. Moore.